• Monday, May 27, 2024
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OPEC yet to decide on supply cuts as crude prices extend retreat

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OPEC has yet to decide to cut its production target, the United Arab Emirates’ energy minister said, as crude prices extend a slide since June amid a boom in US shale oil and signs of slower demand growth in China.

All 12 members of the group must agree before any decrease in its official limit of 30 million barrels a day, the UAE’s Suhail Al Mazrouei said Tuesday, a week after OPEC’s secretary-general said it may lower the ceiling in 2015.

The Organisation of Petroleum Exporting Countries, supplier of about 40 percent of the world’s oil, faces growing competition from North American shale deposits even as economic growth cools in China, the world’s second-biggest oil consumer after the US. OPEC’s monthly report on Sept. 10 showed demand for its oil will decline to 29.2 million barrels a day in 2015 from 29.5 million this year. The group will review its target when it meets next on November 27, at its Vienna headquarters.

“It’s not a one-man decision,”Al Mazrouei told reporters in Abu Dhabi. “It’s a decision by all the ministers when we meet.”

Brent crude, a benchmark for more than half of the world’s oil, has dropped 16 percent from a June 19 peak this year and was at $97.22 a barrel at 10:17am Tuesday on the ICE Futures Europe exchange in London. US West Texas Intermediate crude futures have fallen 15 percent since June 20, and were at $91.05 in New York.

OPEC may reduce its official daily limit by 500,000 barrels to 29.5 million next year, the group’s secretary-general Abdalla El-Badri said September 16. El-Badri, who often speaks for the group, specified that this was an outlook, not a decision. He attributed the slide in crude prices to seasonal demand and predicted a recovery by year-end.

“We still have almost two months before the next meeting,” the UAE’s Al Mazrouei said. “We will make sure that our supply meets demand.”

Growth in China faces downward pressure, that country’s finance minister Lou Jiwel said at the Group of 20 meeting in Cairns, Australia, according to a statement on the website of People’s Bank of China on September 21.

China will account for about 11 percent of global oil consumption this year, compared with 21 percent for the US, according to the International Energy Agency in Paris.